Category Archive: Europe

The financial committee of the Federal Parliament agreed on amendments to the new German Anti Money Laundering (AML) Act (Geldwäschegesetz, GwG) yesterday. The new law will bring important changes for gambling operators.

While the scope of the new AML Act will be extended from online gambling to also offline gambling operators, there are some gambling products (e.g. social lotteries, slot machines) that might benefit from new exceptions because of their low money laundering risk. Other gambling operators (e.g. sports betting shops) might be faced with new challenges like restrictions in payment methods and new administrative offenses with administrative fines of up to 1 million Euro.

To implement the 4th AML directive the new law has to enter into force by 26 June 2017. Prior to this the Federal Parliament and the Federal Assembly are expected to agree to the proposed changes. We will keep you updated on the developments.

Update (19 May 2017): The Federal Parliament adopted the changes on 18 May 2017.

Prize Promotions Around the World is an online tool designed to assist our clients across the globe with the management of the early development stages of a prize promotion (such as a sweepstake or skill-based contest), and to bring to their attention potentially problematic issues.

Key features include:

Additional jurisdictions, now with over 35 countries

Expansion of topics, including rules on judging and sanctions

Interactive map, highlighting the range of risk profiles in different jurisdictions

Today, the investigator appointed by the Swedish Government, Mr. Håkan Hallstedt, handed over his proposal(1,340 pages)for the introduction of a Swedish licensing system to the Swedish Minister for Public Administration, Mr. Ardalan Shekarabi.

On 6 February 2017, in the first successful prosecution of its kind by the GB Gambling Commission, Craig Douglas (33) and Dylan Rigby (34) pleaded guilty to offences under the Gambling Act 2005 relating to unlicensed eSports gambling.

Douglas, a prominent eSports YouTuber known as “NepentheZ”, was fined £91,000 for advertising unlawful gambling and inviting children to gamble. His business partner, Rigby, was ordered to pay £174,000 in fines and costs for offences relating to the provision of facilities for gambling and the advertising of unlawful gambling.

The pair admitted to being directors of Game Gold Tradings Limited which operated and advertised the unlicensed gambling website FutGalaxy.com.

FutGalaxy.com, which has no official connection with the FIFA series of games or EA Sports, allowed customers to buy virtual currency known as “FUT coins”. These FUT coins could then be used to gamble (on products including sports betting, a jackpot lottery style game and a higher or lower style game) and could even be converted into FIFA coins which could be sold for real money via an unauthorised secondary market.

In this case, the lack of child protection was particularly concerning. The District Judge, DJ McGarva, labelled the offences as “very grave” given that there were no restrictions on young persons from accessing the website and placing bets. Sarah Harrison, CEO of the GB Gambling Commission, noted that “the defendants knew that the site was used by children and that their conduct was illegal but they turned a blind eye in order to achieve substantial profits. The effect on children of online gambling was rightly described by the Court as ‘horrific’ and ‘serious’“.

Given the gravity and nature of offending, it is perhaps surprising that the Court did not impose a custodial sentence and instead opted for a relatively small financial penalty. Previous voluntary settlements with the GB Gambling Commission relating to failures in AML compliance and social responsibility controls resulted in significant financial penalties.

With eSports and eSports gambling becoming a growing global trend, it is attracting greater attention from regulators. The GB Gambling Commission is currently undertaking a discussion paper on emerging products in the gambling market, including betting on eSports events. The GB Gambling Commission’s current guidance states that “betting on eSports should be treated no differently as betting on any other live event…if you wish to offer bets to GB consumers on eSports events then you will need a betting licence. The types of betting offered and how you offer them will determine the licence required.”

The Higher Administrative Court of North Rhine-Westphalia (OVG NRW) ruled in a recent decision that sports betting intermediation by an EU-licensed provider does not require a(n additional) German gambling license in North Rhine-Westphalia at the moment. With this decision the court takes a very liberal stance. Yet, this is consistent with last year’s decisions by the ECJ and the German Federal Administrative Court (BVerwG). As a result the operation of sports betting in North Rhine-Westphalia on the basis of an EU-license (and without a German license) cannot be prosecuted as a criminal offense and it cannot be subject to an administrative prohibition.

The decision is anticipated by other EU-licensed sports betting operators that are now able to offer their services at least in the German state North Rhine-Westphalia until the new State Treaty on Gambling enters into force in 2018 when a new sports betting licensing procedure is expected to start. Although the decision is limited to only one of the 16 German states (i.e. North Rhine-Westphalia) it would be consistent to apply it to the other German states, too.

At DLA Piper we pride ourselves in providing the insights, tools and know how you need to plan ahead and manage change in a privacy landscape that is constantly evolving. With publication of the final text of the EU General Data Protection Regulation in April 2016, many organisations are now actively looking ahead to a challenging timetable to secure GDPR readiness, ahead of May 2018.

International Data Protection Day provides an opportunity to reflect on where we see organisations are in terms of managing privacy to an appropriate standard of protection, and share some of the materials and learning we have created to help those on the compliance journey navigate the road ahead.

Data Protection Laws of the World

We are pleased to launch the 2017 edition of our newly designed Data Protection Laws of the World, which now covers over 95 jurisdictions. This highly regarded complimentary go-to guide offers a high-level snapshot of selected aspects of data protection laws across the globe, in an easily accessible online format.

Over 250 organisations have completed our Data Privacy Scorebox to assess current levels of privacy compliance in their respective business operations. Our inaugural Global Data Privacy Snapshot draws on data from the scorebox assessments to provide a perspective on current maturity levels in levels of compliance across the market. The report pays particular focus on maturity levels in the Financial Services, Life Sciences and Healthcare, and Technology and Telecoms sectors, with an overall finding that suggests most organisations have a lot of work on their plate to achieve the levels of compliance they need.

This report will be launching soon.

Data Privacy Scorebox

Launched in 2016, this online tool will help you assess your organisation’s data protection maturity level. Complete a survey covering areas such as storage of data, use of data, and customers’ rights to generate a report that shows your organisation’s maturity levels against 12 key areas of privacy compliance. The report includes a practical action point check list and peer benchmarking data.

Our Privacy Matters blog is where you will find the latest updates (often within hours) from our global privacy team on all matters related to data protection, privacy and security. Subscribe with your email address on the home page to receive a message whenever a new post is made.

We maintain a dedicated GDPR microsite, where you can find lots of useful information to help you learn about the EU Data Protection Regulation – what it covers, the impact it is likely to have on organisations across different sectors, actions to take now to prepare, as well as regular updates and information on our webinars and events.

You will also find our summary Guide to the GDPR which many organisations find a helpful quick guide to the key requirements of the GDPR.

We are soon to launch an EU GDPR App which gives easy access to the Regulation text. Available for download on iOS and Android, the App will provide a handy guide to the GDPR so you can quickly access Articles, link to relevant Recitals and make comparisons back to the Directive. The App will be available in 13 different languages.

Last Friday (on 25 November 2016), DLA Piper Belgium attended a colloquium of BAGO, the Belgian Association of Gaming Operators. BAGO is a new sector initiative composed of various gaming operators licensed under Belgium’s regulatory framework.

During the event, attended by several of the sector’s stakeholders, BAGO called upon the Belgian regulator as well as the legislator to create a legal and operational framework which allows for a diverse gaming offering, whilst respecting both customer protection considerations and economic viability of the sector which will become increasingly digitized.

BAGO intends to offer better insight in the Belgian gaming market by supporting studies and market research and equally drives self-regulation by proposing a gaming advertising code.

The Dutch Games of Chance Authority (Kansspelautoriteit, “KSA”) announced a revision of its enforcement strategy in combatting illegal online gambling. This new strategy kicks off as per 1 January 2017.

Key change is that the KSA will no longer warn individual operators offering online gambling to Dutch players prior to actually taking enforcement measures. To date, the KSA issued warning letters to operators that meet one or more of the prioritization criteria (.nl website, Dutch language, advertisements) first, giving them the chance to modify their gambling operations and cease targeting the Dutch market. In case the warning was neglected, sanctions followed.

As from 1 January 2017, operators that fall under one or more of KSA’s prioritization criteria will no longer receive a warning: illegal online operators are immediately exposed to serious enforcement measures. Such measures may involve fines of up to EUR 820,000 or 10% of the operator’s turnover. The KSA declared that operators that do not meet one or more of the prioritization criteria, but do offer online gambling to Dutch players, are not exempted from enforcement measures either. The operator may be confronted with KSA’s enforcement powers particularly when public interests are at stake.

Reason for the revision in KSA’s enforcement policy is that KSA holds the opinion that by now, it should be generally known by operators that offering online gambling targeted to the Netherlands without a license is illegal.

Until 31 December 2016, operators have the opportunity to amend their current practice in a way that their gambling offer is no longer available to Dutch players and that they do no longer fall under the prioritization criteria. To that end, the KSA recommends operators to take care of an IP-country blockade or other measure that makes online gambling unavailable to Dutch players.

It is expected that the online gambling market in the Netherlands will be open as from early 2018.

The draft of the “Second State Treaty Amending the State Treaty on Gambling” provides for a few changes of the German gambling regulation that try to answer criticism by the European Court of Justice. Sports betting concessions will not be issued on a quantitative but on a qualitative basis in the future. This includes lifting the limit of 20 sports betting concessions and even issuing preliminary concessions for the 35 operators that have been found to meet the requirements for a concession and that are listed in the draft. In addition the German state of Hesse will hand over its competence to issue the sports betting concessions to another German state.

Unfortunately the German states decided to leave it at these minimal changes. They are looking into strengthening the enforcement against unlicensed gambling and into amending the regulation of online casinos. But the draft does not included changes in this regard and it does not address the criticism of the Council of Games of Chance (Gluecksspielkollegium) and the advertising guidelines (Werberichtlinie).

The standstill period of the EU notification procedure lasts until February 2017. The German states aim at a ratification of the new law until 31 December 2017. This means that the amended State Treaty on Gambling will not enter into force before 1 January 2018 and that the interim measure of getting orders of approval for sports betting will become more relevant until the concession procedure is realigned by the new State Treaty.

Last week the German prime ministers reached an agreement on the amendment of the German State Treaty on Gambling (GlueStV). They decided to cancel the limitation of concessions for sports betting. With the 2012 GlueStV the German states wanted to allow up to 20 licenses for private sports betting operators. However, none of the licenses has been issued. This led to criticism by the European Court of Justice (ECJ) and court decisions that even ordered the gambling authorities to issue sports betting licenses for operators. In the future the concessions shall not be limited to the amount of 20 but be assigned on the basis of minimum standards.

In addition to this the prime ministers ask the gambling authorities to consider the possibilities of improving the enforcement against illegal online gambling (especially unlicensed lotteries, sports betting and online casino games) possibly by founding a public-law institution with centralized responsibility. While evaluating the GlueStV the authorities shall also consider the simplification of identification and authentication of players and the substitution of the monthly stake-limit of 1.000 Euro with a loss-limit in the same amount. At last the prime ministers ask the gambling authorities to examine which regulatory measures could improve the regulation of online casinos considering the experience in other European countries. This decision hints in the direction that even licensing of online casinos might be possible in the future.

However, this is just the first decision of the prime ministers. After the criticism by the ECJ a new gambling regulation is needed in Germany and this decision of the prime ministers will hopefully lead to an amendment of the GlueStV in the near future. While the prime ministers of the 16 German states are discussing those amendments the authorities are working on a process to align the sports betting regulation with EU law. They reached an agreement to give out orders of approval for sports betting operators in the meantime. These orders allow (online) sports betting in Germany if certain requirements are met. However, the operator needs an order of approval in every single German state and not every state has an approval process in place.

Following the March UK Budget announcement, HMRC has released a consultation paper on its proposal to impose remote gaming duty on freeplays, to bring the RGD rules into line with the GBD rules.

The proposal is that freeplays (as widely defined) are, when used, attributed a value for RGD purposes and only cash prizes resulting from freeplays, are deductible. Freeplays given as a prize, and vouchers exchanged for a freeplay, will not be deductible. The consultation paper also confirms that operators cannot even now deduct freeplays given as incentives rather than winnings.

Closing date for comments on the consultation is 17th October 2016 . There is no comment on when the changes are due to become law but the original proposal was 1st August 2017.

The UK’s vote to leave the European Union in a so-called Brexit Referendum might also impact companies that provide gambling services in Germany.

Three of the main consequences of Brexit for gambling companies might be:

Companies applying for a German gambling license need a registered office in a member state of the European Union or a state that is a party to the Treaty on the European Economic Area. The UK, Gibraltar and the Isle of Man might not fulfill this requirement anymore after an exit depending on the content of the contracts they will negotiate with the EU in the future. So it might be necessary to move the registered office to another EU country.

Gambling companies with licenses from the UK, Gibraltar and/or the Isle of Man might not be able to refer to the single market and the EU’s freedom to provide services any more if those states are not able to negotiate participation at the single market with the EU. This becomes relevant in court proceedings where EU licensed gambling companies argue that they are allowed to operate in Germany with the non-German but EU license.

In the event of exit companies that collect sporting bets on behalf of UK-licensed operators in Germany will not be able to defend their business with the recent ECJ decision that ruled that EU law may preclude the imposition of penalties in respect of the unauthorised cross-border intermediation of sporting bets carried out in Germany. One strategy against those impacts (2. and 3.) might be to switch from a UK or Gibraltar license to a license from another EU country.

There is still time to look out for the possible changes and adapt the business accordingly. For the moment EU law remains valid and enforceable in the UK and there is no immediate loss of protection. There will be a two year period to negotiate the terms of UK’s exit from the EU, which starts from the date the UK Government officially notifies the EU of its intention to leave. The negotiations need to be completed within two years, although this period can be extended if the negotiations are on-going and if all 28 EU member states agree. We will continue to post updates on developments in this matter here as they arise.

The Gambling Commission has issued a warning to operators who offer markets on pre-recorded TV shows such as the Great British Bake Off and Strictly Come Dancing and other novelty products following negative media reports around the integrity of such betting, causing damage to the wider perception of gambling in Great Britain.

The UK regulator the Gambling Commission has published some enhanced provisions relating to AML and crime prevention. The revised licensing conditions and codes of practice (“LCCP”) are to be implemented in the Autumn. The consultation of last year which preceded these changes was against a backdrop of several high profile settlements with operators which had for the period reviewed apparently failed in the standards required of them.

The UK Gambling Commission has launched a consultation on the specific wording of a new licence condition which places an obligation on licensees to take responsibility for ensuring adverts placed by themselves or others do not appear on websites providing unauthorised access to copyright content.

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This information is intended as a general overview and discussion of the subjects dealt with. The information provided here was accurate as of the day it was posted; however, the law may have changed since that date. This information is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper is not responsible for any actions taken or not taken on the basis of this information. Privacy policy
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